Generally Accepted Auditing Standards

Auditing provides the techniques and procedures by which a competent qualified person objectively accumulates and evaluates evidence in a systematic process , about accounting information related to a specific economic entity , for the purpose of determining and reporting on the degree of correspondence between the quantifiable information and established criteria

Auditing involves planning the nature , timing , and extent of financial information testing and conducting analytical procedures necessary to obtain quantifiable information so that a qualified , independent accountant may issue an opinion as to whether the financial statements fairly represent the financial

position of an entity . Auditing also provides the techniques necessary to examine the internal control system of a company and perform operational or compliance audits by internal or external auditors

In case of an independent audit , the purpose is to investigate and determine if the financial statements submitted for audit have been prepared in accordance with financial reporting practices that are appropriate for the auditee . In most cases , generally accepted accounting principles constitute the the proper audit criteria for judging an auditee 's financial reporting practices . The fundamental aim of an independent audit is to arrive at an objective opinion concerning the fairness and dependability of the auditee 's financial statements . In expressing an opinion on financial statements , auditors assume professional and legal responsibilities for their propriety . To be professionally and legally defensible , the auditor 's opinion must be based on an examination conducted in accordance with generally accepted auditing standards ' Failure to comply with these standards in conducting an audit exposes the auditor to risks of such unfavorable consequences as a loss of public respect or the assessment of sizable legal damages and possibly criminal indictment

Generally Accepted Auditing Standards are those guidelines which auditors must adhere to while conducting an audit of a company 's or government entity 's financial statements . It must also be stated in the audit report that the audit was conducted following Generally Accepted Auditing Standards . Generally Accepted Auditing Standards are divided into three main areas : 1 )General Standards , 2 ) Standards of Fieldwork and 3 )Standards of Reporting . Each area contains three or four specific standards . General Standards : There are three general standards . They deal with technical training and proficiency , independence , and due professional care . To have technical training and proficiency means you have the

proper educational background . This is demonstrated by passing a comprehensive examination . Independence is the most important attribute of an auditor . An auditor must remain independent of the client at all times and avoid all situations that may jeopardize his independence . Due professional care means working carefully and being willing to take responsibility for the accuracy of the work . Standards of Field Work There are three standards of field work . They address proper planning and supervision , examination and evaluation of internal controls , and collecting sufficient and competent evidence . An auditor must adequately plan his audit in advance and be familiar with the business and industry of his client . He should test the internal control system of the client especially those...